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Wells Fargo Bank, N.A. v. Pine Barrens Street Trust

United States District Court, D. Nevada

March 31, 2019

WELLS FARGO BANK, N.A. and FEDERAL NATIONAL MORTGAGE ASSOCIATION, Plaintiffs,
v.
PINE BARRENS STREET TRUST; RMI MANAGEMENT, LLC dba RED ROCK FINANCIAL SERVICES; and VENEZIA COMMUNITY ASSOCIATION, Defendants. VENEZIA COMMUNITY ASSOCIATION, Counter-Claimant,
v.
RMI MANAGEMENT, LLC dba RED ROCK FINANCIAL SERVICES, Counter-Defendant.

          ORDER

          RICHARD F. BOULWARE, II UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         Before the Court are two pending motions: Defendant Pine Barrens Street Trust's Motion to Dismiss, ECF No. 42, and Defendant RMI Management, LLC dba Red Rock Financial Services's Motion to Dismiss, ECF No. 43.

         II. PROCEDURAL BACKGROUND

         This matter arises from a nonjudicial foreclosure sale conducted by a homeowners' association under Nevada Revised Statutes (“NRS”) Chapter 116 in 2012. ECF No. 1.

         Plaintiffs Wells Fargo Bank, N.A. and Federal National Mortgage Association (“Fannie Mae”) sued Defendants Pine Barrens Street Trust, RMI Management, LLC dba Red Rock Financial Services (“Red Rock”), and Venezia Community Association (“HOA”) on May 30, 2017. ECF No. 1. In the complaint, Plaintiffs allege seven claims: (1) Declaratory Relief against Pine Barrens under the Federal Foreclosure Bar, 12 U.S.C. § 4617(j)(3); (2) Quiet Title against Pine Barrens under the Federal Foreclosure Bar; (3) Declaratory Relief by Wells Fargo against all Defendants under the Fifth and Fourteenth Amendments to the federal constitution; (4) Quiet Title by Wells Fargo against Pine Barrens under the Fifth and Fourteenth Amendments to the federal constitution; (5) Wrongful Foreclosure by Wells Fargo against all Defendants; (6) Violations of Nevada Revised Statutes (“NRS”) Chapter 116 by Wells Fargo against Red Rock and HOA; and (7) Unjust Enrichment by Wells Fargo against Pine Barrens. ECF No. 1.

         Red Rock moved to dismiss claims five and six on July 24, 2017. ECF No. 12. Plaintiffs filed a non-opposition to the motion. ECF No. 19. Pine Barrens moved to dismiss the entire complaint on August 14, 2017. ECF No. 17. Wells Fargo opposed the motion and Fannie Mae filed a countermotion for summary judgment. ECF Nos. 24, 25. Pine Barrens filed a reply to the opposition and an opposition to Fannie Mae's counter motion. ECF Nos. 27, 33. Fannie Mae replied. ECF No. 34.

         The HOA answered the complaint and asserted a cross-claim against Red Rock on September 1, 2017. ECF No. 21. Red Rock answered the cross-claim on September 21, 2017. ECF No. 28.

         On March 23, 2018, the Court denied the pending motions to dismiss and the pending countermotion for summary judgment without prejudice to refiling after a decision issued on a pending certified question before the Nevada Supreme Court. ECF No. 40. The Nevada Supreme Court issued the decision in August 2018.

         Pine Barrens now moves to dismiss the complaint in its entirety. ECF No. 42. Plaintiffs opposed the motion, and Pine Barren replied. ECF Nos. 57, 58.

         Red Rock also re-moves to dismiss claims five and six. ECF No. 43. The HOA joined to Red Rock's motion but Pine Barrens did not. ECF No. 46; see also docket generally. Plaintiffs did not oppose the motion. See docket generally; see also ECF No. 50 (allowing an opposition to be filed until October 16, 2018).

         III.FACTUAL BACKGROUND

         The Complaint alleges the following:

         This matter concerns a property located at 7245 Pine Barrens Street, Las Vegas, NV 89148. The property sits in a community subject to certain Conditions, Covenants, and Restrictions (“CC&Rs”) for the HOA. The CC&Rs include a mortgage savings clause, which states that any lien on the property is not superior to a deed of trust recorded against the property. Because the property sits in a community governed by the HOA, the community members must timely pay homeowners' association dues.

         Nonparty Subhash V. Chandran secured a loan for $133, 588.00 from World Savings Bank, FSB on January 14, 2004. To do so, Chandran executed a promissory note and a corresponding deed of trust in favor of World Savings Bank. The deed of trust was recorded on January 21, 2004, identifying Chandran as the borrower and World Savings Bank as the beneficiary of record under the deed of trust. Fannie Mae purchased ownership of the loan (the promissory note and the deed of trust) in July 2006.

         Wachovia Corporation acquired World Savings Bank in October 2006. Two years later, Wells Fargo acquired Wachovia Corporation. Wells Fargo remained the servicer of the loan and the record beneficiary of the deed of trust for Fannie Mae.

         In September 2008, the Federal Housing Financial Agency (“Agency”), an independent federal agency with regulatory and oversight authority over Fannie Mae, placed Fannie Mae into a conservatorship under the Housing and Economic Recovery Act, 12 US.C. § 4511 et seq. Under the conservatorship, the Agency succeeds to “all rights, titles, powers, and privileges of [Fannie Mae.]” 12 U.S.C. § 4617(b)(2)(A).

         Wells Fargo continued in its role as the servicer for the loan on behalf of Fannie Mae. It also continued to be the record beneficiary of the deed of trust. Wells Fargo was acting in the same capacities through October 30, 2012.

         The relationship between Fannie Mae and its servicers, including Wells Fargo, are governed by Fannie Mae's Single-Family Servicing Guide (“the Guide”). The Guide provides that servicers may act as record beneficiaries for the deeds of trust owned by Fannie Mae. It also requires that servicers assign the deeds of trust to Fannie Mae upon Fannie Mae's demand.[1] The Guide states:

The servicer ordinarily appears in the land records as the mortgagee to facilitate performance of the servicer's contractual responsibilities, including (but not limited to) the receipt of legal notices that may impact Fannie Mae's lien, such as notices of foreclosure, tax, and other liens. However, Fannie Mae may take any and all action with respect to the mortgage loan it deems necessary to protect its … ownership of the mortgage loan, including recordation of a mortgage assignment, or its legal equivalent, from the servicer to Fannie Mae or its designee. In the event that Fannie Mae determines it necessary to record such an instrument, the servicer must assist Fannie Mae by [] preparing and ...

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